Quanto Futures and Options

Quanto Futures and Options are cash settled Derivatives in which the underlying traded product is denominated in a foreign currency that is settled in another domestic currency at a fixed exchange rate. These products appeal to market participants seeking foreign commodity exposure without the corresponding risk of adverse exchange rate fluctuations. The JSE’s wide range of Quanto Futures and Options products reference energy products, metals and Soft Commodities. ​

Who should use this?

Investors will typically use this product when they have a specific view of the price of the commodity and will either buy or sell the commodity based on this view. Commodity investors and speculators hoping to make a profit on price movements in the futures or options contract price based on the foreign referenced commodity would do well to consider this product since pricing is not influenced by any exchange rate fluctuations.

Features

• Protects investors from Rand-Dollar exchange rate fluctuations of the underlying commodity allowing them to benefit directly to the dollar price performance of the underlying commodity
• Enables identification of short and long term price and volatility patterns
• Gain exposure based on expectation of directional price, spread movement or volatility of the foreign commodity
• Easy access to the international commodity market with a contract traded in rands
• The risk of loss given local and global environmental and socio-economic factors which can significantly impact the price of commodities

How to get Quanto Futures and Options

To access this product, an investor needs to register as a client with an authorised member firm, deposit the required initial margin and sell or buy according to their market views.

Qualifying factors

• No limits apply to individuals, foreigners or corporate entities
• Pension funds and long term insurance companies subject to their 25% foreign allocation limits
• Asset managers and registered collective investment schemes subject to their 35% foreign allocation limits
• For the full details relating to qualifying factors, speak to your broker​